sebi:WTM/MPB/ISD/24/2017

SEBI · SEBI · 2017-08-07 · Madhabi Puri Buch, Whole Time Member

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Facts / Headnote

Interim directions issued modifying actions envisaged in SEBI's letter dated August 07, 2017; trading reverted to XD group of BSE with applicable price band; forensic audit ordered; promoters/directors permitted only to buy securities; representation disposed of.

Provisions invoked

• s. 11B
• s. 11(4)
• s. 19
• s. 11(1)
• s. 226(3)

Parties

• Info-Drive Software Limited

Holding

SEBI found prima facie evidence of misrepresentation of books of accounts by Info-Drive Software Limited and possible misuse of funds, and accordingly modified the earlier trading restrictions by reverting the scrip to XD group with price band, ordering a forensic audit, and restricting promoters/directors to only buying securities.

Full text

Order in the matter of Info-Drive Software Limited Page 2 of 12 5. Therefore, in the interest of investors, SEBI took the pre-emptive interim measures under section 11(1) of SEBI Act in respect of listed shell companies including Info-Drive Software Limited (hereinafter referred to as “ISL” / “Company”), vide its letter dated August 7, 2017, based on the view stated at para 3 and 4 above. SEBI placed trading restrictions on promoters/directors so that they do not exit the company at the cost of innocent shareholders. In view of the said objective, SEBI vide the letter dated August 7, 2017 also placed the scrip in the trade to trade category with limitation on the frequency of trades and imposed a limitation on the buyer by way of 200% deposit on the trade value, so as to alert them on trading in the scrip. The said measures were initiated by SEBI pending final determination after verification of credentials and fundamentals by the stock exchanges, including by way of audit and forensic audit, if necessary. The measures also envisaged, on the final determination, delisting of companies from the stock exchange, if warranted. By virtue of these measures, trading in the scrip was not suspended but allowed under strict monitoring so that investors could take informed investment decisions till SEBI and stock exchanges complete their detailed examination of such companies.

Order in the matter of Info-Drive Software Limited Page 3 of 12 vi) The company was awarded contract in 2013 by state government of Tamil Nadu for implementation of web based solutions for 110Cooperative Credit Societies in Chennai Region. vii) The company has six subsidiaries across the globe – UAE, USA, Singapore, Malaysia etc.

Order in the matter of Info-Drive Software Limited Page 4 of 12 a) Filed income tax returns for last three financial years. Further, that there are disputes / appeals pending before CIT (A) / ITAT / Dispute Resolution Panel (DRP) for AY 2004-05, AY 2009-10, AY 2010-11, AY 2011-12 & AY 2013-14 aggregating to Rs.11.05 cr. b) Not filed Annual Accounts (AOC-4) and Annual Return (MGT-9) for financial year 2015 and 2016. c) Company is a going concern. d) There are no default in any loans with any bank / financial institutions. Further, company has account with Axis Bank which is dormant & inoperative from the period April 01, 2016 to till date & same is under lien consequent to a garnishee order issued under section 226(3) of IT Act, 1961 e) Complied with key clauses of erstwhile listing agreement/ SEBI (LODR) Regulations, 2015 for last 3 years. Exchange vide email dated August 30, 2017 has sought clarification from the company regarding the following: a) Auditor’s Certificate confirming description of company’s business model and bank statement of an active bank account for last one year. However, till date company has neither provided clarification nor sought any personal hearing.”

Source: SecMarx — sebi:WTM/MPB/ISD/24/2017. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.